Recent Significant Developments in US Crypto Regulation

It's been 6 months since the start of President Trump's second term and we've seen sweeping changes to US crypto regulation during this time.

Here, we look back at 6 significant developments we've highlighted to subscribers and look to see what's next.

1. SEC Task Force & Executive Order

• The SEC formed a crypto task force to develop a regulatory framework and published a statement outlining its focus areas. 
• Staff Accounting Bulletin (SAB) No.121 was rescinded, lifting the requirement for firms holding digital assets to record a liability on their balance sheets.
• President Trump issued an Executive Order supporting responsible growth and use of digital assets, blockchain, and related technologies. A working group was established to propose legislation and regulatory frameworks, including on stablecoins and the creation of a digital asset stockpile. 

2. SEC Clarifications on Securities Law Application

Between February and May, the SEC issued statements confirming that:

• transactions in certain types of meme coins and stablecoins
• mining of certain crypto assets on proof-of-work networks and
• protocol staking activities in connection with certain types of protocol staking, 

do not involve the offer/sale of securities under federal securities laws.

Participants in such activities are not required to register those transactions with the SEC or fall into an exemption. 

3. OCC Clarification on Permissible Activities

The OCC confirmed that national banks and federal savings associations can engage in crypto-asset custody, certain stablecoin activities, and participation in independent node verification networks (such as distributed ledgers).

4. FDIC Policy Shift

FDIC-supervised institutions may now engage in crypto activities without prior FDIC approval, provided they properly manage associated risks and comply with applicable laws. 

5. DoJ's Revised Enforcement Approach

• The DoJ will no longer pursue enforcement actions that superimpose regulatory frameworks on digital assets or target virtual currency exchanges for the actions of their users or unwitting violations 
• Enforcement will focus on holding individuals accountable for misconduct causing investor harm or involving use of digital assets in furtherance of other crimes
• Federal prosecutors have been instructed not to charge regulatory violations in digital asset cases unless there is evidence of wilful violation of licensing/registration requirements.

6. Federal Reserve Board position on bank's crypto and dollar token activities

The FRB announced the withdrawal of certain guidance on banks' crypto and dollar token activities meaning

• State member banks are no longer expected to provide advance notification of planned or current crypto asset activities and will instead be supervised through normal processes
• Such banks can also engage in dollar token activities without needing to receive notification from the Federal Reserve of supervisory non-objection. 

7. What's next?

After the proposed licensing and supervisory framework for stablecoins and their issuers, the GENIUS Act, was passed by the US Senate in June, we're keeping a close watch on whether the Act will be passed by the House of Representatives.

We're also keeping an eye on progress of the proposed Clarity Act, which aims to create a regulatory framework for digital assets.